Apple is considered and worshipped as the world’s most imaginative organization. Its items and plans of action say a lot about its development methodology. Throughout the years, it has demonstrated as a distinct advantage in the contraptions business offering items like cell phones, tablets, music players, Smartwatches, numerous accessories and so on which are all introduced with creative programming and applications that have exceptional highlights. Apple’s item structure and applications are the fundamental differentiators for the organization and help it to emerge from the competitors and charge a premium from the clients.
Apple’s development originates from its work culture and condition as opposed to its procedures. It began improving early even before formal procedures and structures are set up. The firm urges representatives to think of intriguing thoughts and gives the expected freedom to be inventive in plan and advancement. It bridles these thoughts into items and software.As of late Apple has developed as one of the greatest organizations on the planet for moving electronic devices.
Their unique plan, and in addition unmistakable operating systems, have made them best other companies of makers for vigorously solid devices which assist the organization with growing noticeably into the worldwide Markets and to increase enormous revenues.
Apple is am a multi-million brand with huge investment and a very large number of investors. Their strategical execution is unquestionably one of the world’s best-actualized techniques.
Apple’s global technique incorporates an extensive variety of items traversing from premium pcs to the iPhones.
Their worldwide institutionalization incorporates institutionalization of the general administrations and the item quality over Fr markets. High interest in innovative work and countless and outlet with best in class guarantee the executives framework makes them the greatest boss and tech supplier in a similar field. One of the primary systems is to give an element stuffed premium gadget which is summed up in every global region.
1. Ownership Concentration,-
The ownership is more concentrated with institutional investors holding around 62% shares. Several Investment Funds have included apple in their portfolio
Total Value of Holdings 497,437,523,953
Top 5 Holders of Institutional Holdings
Investment funds that hold a major share include
2. Board of Directors
The board of directors includes a chairman and several independent directors. They come from varied backgrounds bringing with them rich experience in terms of finance, operations, and marketing.
Apple Inc.’s market share and revenue for 2013-2017
Revenue Worldwide $170.90 $182.80 $233.72 $215.64 $229.23
(in billion U.S dollars)
Market Share $15.60% $20.40% $17.70% $20.30% $24.30%
Apple lastly raised its dividend in May 2017. The company usually targets a 10% increase in its quarterly dividend. The company has plenty of room to increase its dividend if it wants. The catalyst for apple dividend seems to be latest tax reform efforts from congress. Many investors thought that this favorable tax treatment can generate substantial amount of revenue which can result in larger dividend payout boost.
The company has already used financial engineering to borrow for use in share buy backs. Hence it wants to pay at least a substantial portion of debt before it can think about dividends.
Relationship between cost of capital, capital structure & risk:
Cost of capital is considered to be an important factor in determining company’s capital structure. An optimal combination of debt & equity can reduce the cost of capital. Deciding an optimal structure can be a challenging task for the company because both debt & equity have their own advantages. Debt can provide tax benefits for the company & equity helps in raising the capital easily in large volume. This is where the risk comes into the picture. If the company raises excess debt it will be in the risk of becoming default which ultimately results in company winding up. The equity form of the option will have the risk of the company losing the ownership or control to its current shareholders.
This relationship is essential for the company to make good decisions. This is because the company must have a good corporate structure with an optimal combination of equity & debt to reduce the cost of capital. It can’t go for more equity or more debt. Hence a good combination required for making sound decisions & maximizing the company’s value by reducing risk.
Apple started to pay dividend from year 2012 on account of accumulated revenue of over $25 Billion from the sales of iPhone and iPad products from its launch. Just like any other companies, Apple had steady increase in dividend distribution amount which gives insights of its growing revenues; the dividend payout ratio of around 26% from year 2013 to 2015, whereas it increased to around around 33% in year 2016. The dividend payout ratio is growing as said earlier is due to revenue growth and accumulated cash. But still Apple’s dividend yield is 1.68% as compared to industry’s 2.23%. If Apple continues with its dividend policy than over a period of time dividend yield will improve.
Apple share repurchase program in a way states company is confident on it’s earning and with 3 year program of buy back, it is one way of returning accumulated profits back to investor just like dividend. Also, with less share outstanding the stock price will also rise. But the main take away or insights we get is that Apple management in continuation with these program is moving to a square where constant growth rate dividend payout is there and cyclical business changes would not impact their payout program.
Overall Apple management is not only confident about its business growth drivers and its positive outcomes but is also committed in returning profits to investors.
The risk Score is an important measure for the evaluation of a stock appeal. Apple Inc. demonstrates a risk Score of 8.00.
0 relates to a high risk and 10 compares to a low risk. The risk Score for Apple Inc. is essentially higher than its peer groups. This implies Apple Inc. is essentially less risky than its peer groups.(www.infrontanalytics.com)
These days, Apple Inc’s weighted average cost of capital is 8.73%. Apple Inc’s ROIC % is 34.64% (determined utilizing TTM salary proclamation information). Apple Inc creates higher rates of return than it costs the organization to raise the capital required for that Investment. It is procuring excess returns. A firm that hopes to keep producing positive excess returns on new investments, later on, will see its value increment as growth increases.
Apple’s international strategy includes a wide range of products spanning from premium pcs to the iPhones. Their international standardization includes standardization of the overall services and the product quality over global markets.High investment on research and development and large number of stores and outlet with state of the art warranty management system makes them the biggest empoyer and tech provider in the same field. One of the main strategies are to provide a feature packed premium device which is generalized in every global region.
Apple’s basic strategy is to develop the products and simultaneously improving the design and utilize the overall difficulties by implementation of different strategies. Company’s strategy is to build quality product which are based on performance and stands out of the market .
Apple’s quality standards are very high hence produced products R&D cost is usually very high and final product si superior in terms of quality. Company also put extreme efforts to do something out of the box.
Apple’s model includes ethical as well as social responsibility and its composition of the legal, Ethical and economical responsibilities hence all the influence of the ethics and social responsibilities reflects in the organization.An efficient governing system with a legitimate strategical implementation drives the organization and furthermore improve a workplace for the framework
Apple’s ethics standard is very high and which is applied into the work structure if the company from the very basic level.
Apple insist in making their work pattern as on of the best in the industry. Apple inures that it uses the highest standard in making of their products and for the application the overall strategies . They treat their workers with due respect and dignity and also provide a safe and responsible manufacturing facility.
Apple has a big diversified range of products . Initially apple used to deal in computers only then they came in the ipod and then mainstream phone business. Apple has evolved itself from a computer company to a big global brand. Constant research and development and high number of best engineers and bright minds are already looking for the best ideas and to create a better product.
Apple’s legal limitation includes a good act of 1979 in which, Apple has to sell their products as they are described to avoid any claims from customers. Act of 2008 which states that apple has to treat their customers in a fair manner and they cannot use negative sales techniques and promotions. All the market strategies and apples sales promotion have to be in the legal area.
Apple inc. has a large design and development team as well as marketing team , They build everything from the portable music players to the big MAC computers. Apple also provides services and other informatics which is controlled by headquarters on California. Apple has a huge number of employees and earns a huge revenue every year.
Apple always keep implementing its marketing strategies some of them are introducing a wearable, Apple watch. Every year growth of sales in iPhone is extremely huge and it is almost doubling up every year. Apple has a huge gross profit margin which is climbing up every year which is one of the main watchable metrics for the apple inc.
By implementing modern driving diversions for downloading music, all organization can lose a greater amount of its clients. By presenting a muddled cost in the framework into a music store, can without much of a stretch befuddle clients between purchasing the music on the web.As the highly competitive market is present, complex pricing system can leave your potential customers to other service providers for buying the music. By properly implementing a generalized rising system which is easier to understand for the customer makes them by the music on a better way.
As any other company in this industry, objective is also to maximize its sales by any downloading of the music as well as the product and services Apple deal into. Apple has successfully increased their growth by 33% in one year in from 2003 to 2004. Increase number of iPod sales and availability of different music players from the Apple created success of downloading music from iTunes and following the complex pricing structure of Apple revenues are increased. As apple’s pricing policy falls in the high end segment, reduce in the noodle users in next few years is expected as there are so many competitors are available with better pricing options.
By Linking device to itunes and limiting them to download the music only from our iTunes, apple is creating a Monopoly based music library system which limits the customers find give abilities to there music library in iTunes and to follow the complex pricing system of Apple which is one of the major objective for the major record companies to collaborate with Apple iTunes and earn more revenue from the society.
As a huge competition is growing into the market, apple has to change its pricing policy against the music in developing Nations which have the biggest market of the music, and would not follow the traditional pricing system of Apple hence it would reduce the overall number of users and the revenue. For getting with better revenues from the market apple has to change there marketing strategy and the pricing system of the music in upcoming years.
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